BUSINESS DRIVEN

Our Financial Strategy

Enhance the financial position of the Airport Authority.

A FLEXIBLE & NIMBLE APPROACH TO FINANCE

Sustainable Results

At SAN, we pursue excellence in all of our business practices, including our financial strategy, by ensuring that our financial plan is flexible, nimble and able to proactively address future changes in the aviation industry and in the overall economy.

In fiscal year 2016, we experienced strong revenue growth across most sectors of our operation, including airline and non-airline categories, largely due to the opening of the Rental Car Center, an increase in enplanements and increased cost recovery. Revenue growth also occurred as a result of further development of the concessions program and upgrades to parking facilities, among other factors.

We also had a clean audit for the eighth consecutive year and no material weaknesses or significant deficiencies were identified.

In December 2016, the Airport Authority Board accepted the audited financial statements and the Comprehensive Annual Financial Report (CAFR) for FY 2016. The complete CAFR is available on the Airport Authority website at www.san.org/Airport-Authority/Financials.

Also in 2016, the Federal Aviation Administration approved the Airport Authority’s 12th Passenger Facility Charge (PFC) application for a $4.50 Passenger Facility Charge (PFC) for projects at San Diego International Airport. The approved total of $43.8 million will provide funding for passenger boarding bridge replacements, runway and taxiway pavement rehabilitation, as well as the local match to grant funding for the Quieter Home Program. The PFC has been capped at $4.50 since 2000.

As always, the challenge for the Airport Authority is continuing to provide first-class customer service and amenities while being true to our goal of being a good fiscal steward.

INTEGRATED STRATEGY ANTICIPATES DISRUPTIONS

Business Continuity and Emergency Preparedness

San Diego depends on reliable air transportation service to help maintain the region’s economic prosperity and protect its quality of life. The San Diego County Regional Airport Authority has processes in place that ensure airport operations continue at the highest possible level during and after a disruptive event.

Specifically, the Airport Authority has developed the Business Continuity Management System (BCMS), an integrated strategy to prepare for, respond to and recover from emergencies or other business disruptions.

In 2016, the Authority conducted an Emergency Plan Review and Tabletop Exercise with tenants and responding agencies. In addition, San Diego International Airport’s (SAN) entire Airport Emergency Plan was updated and submitted to the Federal Aviation Administration for approval.

Challenges

Safety and security are top priorities at SAN, and, as such, require the active engagement and coordinated response of many different partners. To ensure proper coordination, emergency incident responsibilities for tenants, responding agencies, and appropriate Authority departments must be constantly reinforced and practiced.

Look Ahead

Over the next couple of years, two new Aircraft Rescue and Fire Fighting (ARFF) vehicles will be purchased to replace older, maintenance-intensive equipment. These specialty vehicles are critical for SAN’s effective and timely response to any airport ground emergency.

JOB CREATION DRIVES REGIONAL ECONOMY

Economic Contributions

San Diego International Airport (SAN) is essential to the economic growth and well-being of the greater San Diego region. Based on a 2012 study, SAN contributes about $10 billion annually in economic benefit to the region.

SAN also provides continuous employment to roughly 8,000 people who work full-time at the airport. In fact, about one of every 16 jobs in the region is directly or indirectly related to airport operations.

For example, the Rental Car Center, which opened in January 2016, generated approximately 4,600 construction jobs, with $186 million in construction contracts going to local and small businesses.

Challenges

With SAN's constrained 661-acre site, the Airport Authority must find innovative ways to meet future air travel demand, forecasted to be over 25 million passengers annually by 2035.

Look Ahead

By summer 2017, two new international flights will begin direct service from San Diego to European destinations – Frankfurt, Germany and Zurich, Switzerland. This international service is expected to bring significant economic benefits to the region. For example, the current Japan Airlines service to Tokyo generates an estimated $90 million positive economic impact every year to San Diego.

TOTAL REVENUE BY YEAR

$153

Million

2013

$195

Million

2014

$210

Million

2015

$234

Million

2016

BUILDING TOWARD A BETTER FUTURE

Infrastructure Improvements and Financing

On average, the San Diego County Regional Airport Authority spends about $260 million annually on infrastructure through its capital improvement program (CIP) to enhance the customer experience and to ensure efficient and safe operations. Numerous CIP projects were completed in 2016, such as the consolidated Rental Car Center (RCC), the Taxi Hold Lot, and an on-airport roadway linking the terminals with services on the north side of the airport, such as the Economy Parking Lot and the RCC.

The RCC and the North Side Utilities Storm Drain project were recognized with “Project of the Year” honors for 2016 from the American Public Works Association (San Diego/Imperial Counties Chapter). The RCC also received a “Golden Watchdog” award from the San Diego Taxpayers Association for its efficient use of public dollars.

The Airport Authority also continued its progress in creating a new Airport Development Plan (ADP). The ADP creates a blueprint for redeveloping San Diego International Airport (SAN) to meet demand through 2035. One of the near-term priorities of the ADP is the replacement of Terminal 1. In 2016, the Airport Authority further refined its layout concepts for the new Terminal 1 and other ADP-related facilities.

In 2016, the San Diego International Airport’s expansion of Terminal 2 West received the Institute for Sustainable Infrastructure’s Envision Platinum award. The Envision rating system was developed to facilitate the design and construction of sustainable and high-performing civil infrastructure projects. This was the first airport project in the world to receive the designation and is only the 13th project, in general, to receive an Envision certification.

Challenges

The Airport Authority will consider a variety of financing mechanisms to support the ADP.

Look Ahead

The Airport Authority will be initiating the formal environmental review for the ADP in 2017. The public process will enable the airport and community to identify any potential impacts from the ADP and propose mitigation strategies to address them. In addition, the Airport Authority will be building a new Federal Inspection System (FIS) facility in order to provide adequate customs processing capacity for new international flight services.